Учредители и издатели журнала Федеральное государственное автономное

Journal of Tax Reform. 2022;8(3):218–235
232
ISSN 2412-8872
the budget deficit will triple in 2023–2025. 
Considering the COVID-19 and immigra-
tion problems, Turkey’s fiscal policy-orien- 
ted policy should be an expected result. 
There are subjective and objective 
reasons for this. For subjective reasons, 
institutional problems can be expressed 
as the increase in unemployment dur-
ing the pandemic period, the closure of 
companies, the increase in social security 
expenditures of immigrants, and the ina-
bility to abandon the inflationary growth 
policy. For objective reasons, the decrease 
in exports, especially during the pandemic 
period, followed by the increase in interest 
rates by the USA, the decrease in foreign 
exchange reserves, and global instability 
necessitate fiscal policies. Therefore, the 
fiscal policy variables used in the study 
did not show a homogeneous feature.
This situation can be explained by the 
insufficient capital accumulation in Turkey 
and the fact that the private sector is still in 
the development stage. On the other hand, 
while the effect of investment expenditures 
on the components of public expenditures 
supported the crowding-out finding, the 
transfer expenditures coefficient was ne- 
gative. Accordingly, unrequited transfer of 
the public sector, such as health expendi-
tures in Turkey, increases the total demand 
by increasing public expenditures and ulti-
mately has a reducing effect on fluctuation 
(auto-stabilizer). When the effect of public 
revenues on cyclical fluctuations is exa- 
mined, it has been determined that direct 
tax revenues have a reducing effect. Ac-
cordingly, while taxes on income reduce 
fluctuations, taxes on consumption increase 
fluctuations. On the other hand, the increase 
in the budget balance in the GDP ratio has 
an increasing effect on the fluctuations. It 
can be said that the fluctuations will move 
away from the balance because the fiscal 
policies followed by the balanced budget 
principle are financed by indirect taxes.
6. Conclusion
The main purpose of this article was 
to make some comments on the fiscal 
policy in Turkey.
The empirical results obtained from 
this study show that transfer and invest-
ment expenditures and direct tax reve-
nues act as automatic stabilizers against 
economic fluctuations in Turkey. It reveals 
that indirect tax revenues, public expendi-
tures, and budget balance move together 
with the conjuncture.
Turkey has been trying to rapidly 
integrate into global markets since the 
1980s. For this reason, panel data analy- 
zes are also included in the study besides 
time series analysis. The results of the ana-
lyzes made for OECD, developing and 
EMs countries also include Turkey. The 
findings of the study are in parallel with 
many studies. These studies emphasize 
that especially government expenditures 
in developing economies move with the 
conjuncture. In addition, studies sugges- 
ting that public revenues and expendi-
tures will create a crowding-in effect
instead of a crowding-out effect in the 
economy have suggested that this is hap-
pening in underdeveloped countries.
Policymakers in Turkey cannot fight 
cyclical fluctuations using only fiscal
policies. Especially in an economy where 
inflation is high, tax reforms should be 
designed to ensure vertical and horizontal 
justice of the tax. In this case, the effect of 
inflation on the real tax burden will also 
decrease, but there has not been an infla-
tion adjustment for the tax tariff in Turkey 
yet. The increase in the tax burden with 
inflation will cause a contraction in the 
economy as it reduces disposable income, 
and thus, while the injustice in income
distribution increases, the cyclical fluctua-
tion will become more severe. 
Therefore, to improve growth perfor-
mance by reducing volatility, it is neces-
sary to introduce fiscal rules that limit the 
use of the cyclical policy. Studies in the 
literature advocate the introduction of fis-
cal rules against fluctuations in economies 
with high populist tendencies and fluctua- 
tions and argue that fiscal rules are an
important factor in reducing fluctuations.
Of the three hypotheses tested in this 
study, it has been determined that H1 is 
valid for indirect tax revenues, public ex-
penditures, and balanced budget, and H2 
is confirmed for transfer and investment 
expenditures and direct tax revenues.

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